Economic Principles and Decision Making

This report provides an economic profile of Australia and analyzes the impact of Covid-19 on the country's macroeconomy. It also critically analyzes the macroeconomic policy measures taken by Australia and a selected country to minimize the negative impact of Covid-19.

ECONOMIC PRINCIPLES AND
DECISION MAKING

Executive summary
The above report is based on government of Australia to provide an economic profile for
the country and to make recommendation in the context of expected economic fallout from
Covid 19. Economic principles are termed out as to satisfying the unlimited consumer wants
with limited resources. In this, study will show macroeconomic performance and social impact
of the Australian economy that related with the macroeconomic indicators such as GDP per
capita, inflation, unemployment etc. Additionally, report will cover social issue such as Covid-19
that has affected the recent developments of Australian macro-economy. In this study, one Asia
specific country as India will be selected. Also, critical analysis will be conducted on Australia
and chosen country macro-economy policy measures to minimise the negative impact of Covid-
19. Thus, study will cover the impact of corona outbreak that result into major disruptions to
economic activity across the world. Also, assignment will show macro-economic measures that
aids to cope up with the outbreak of Covid-19.

Table of contents
Executive summary..........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Describe macro-economy performance of Australia economy based on macro-economy
indicators with selecting one social issue...............................................................................4
Critically analyse how Australia and selected country applied macro-economy policy
measures to minimise negative impact of covid-19...............................................................5
CONCLUSION................................................................................................................................9
RECOMMENDATION....................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Economic principles and decision making is one of crucial principles of economies that
aids to understand that how the business decision is strategic plan that aids to support the
economy (McKibbin and Fernando, 2020). Therefore, the economies principles and decision
making inclusive of varied choice of decision, products, method of production etc.
The present report is based on government of Australia to provide an economic profile for
the country and to make recommendation in the context of expected economic fallout from
Covid 19. Furthermore, report will cover macroeconomic performance and social impact of the
Australian economy that based on macroeconomic indicators such as GDP per capita, inflation,
unemployment etc.
Hence, assignment will be based on one social issue such as Covid-19 that has affected
the recent developments of Australian macro-economy. In this study, one Asia specific country
will be chosen as India and critical analysis will be conducted on Australia macro-economy
policy measures to minimise the negative impact of Covid-19.
MAIN BODY
Describe macro-economy performance of Australia economy based on macro-economy
indicators with selecting one social issue.
The chosen social issue is as Covid 19 that has significantly affected the macro-economy
performance of Australia. Hence, the spread of Covid-19 novel corona virus around the world
has been fast and very dramatic (Yue, Shao and Dong, 2020). In order to access the possible
effects of coronavirus on the economy, this is significant to focus on the epidemiological profile
of the virus but also on the way that business, consumer and government responded. Henceforth,
impact of covid-19 on indicators of macro-economy performance of Australia economy are
outlined in following context such as-:
Gross domestic product- The per capita income of Australia expects the global GDP to fall
almost 1% this year due to Covid-19. Therefore, the international monetary fund of Australia
expected the global recession this year and this will lead the downturn in the financial crisis of
Australia. In the countries such as Australia the 6.4% of the GDP will be highly get affected.
Henceforth, impact of Covid-19 will significantly affect Economy & Cost of living that is al
problems and money issues, Economic problems, interest rates and the Australian economy,

Housing affordability, cost of living, rising prices and inflation. Hence, Australia’s GDP about
0.2% lower in 2020 as result of the outbreak of Covid-19 (Wittwer, 2020).
Inflation- The rate of inflation also gets impacted due to outbreak of Covid-19. Therefore,
inflation increases the cost of living for people. Thus, prices of grocery and living all are
enhancing in terms to reduce the impact over economy. Thus, Reserve bank of Australia has
declared the comprehensive package of the jobs, incomes and business as the Australian
economy deals with Coronavirus. In order to reduce the negative impact of Inflation, the interest
rate also get enhanced.
Unemployment- The rate of unemployment tends to enhance due to outbreak of Covid-19. Thus,
most of the factories, hospitality is shut off and this has affected the job of varied people. In the
Australia, the labour market shows up the great recession. From Australian Bureau of statistic,
this has been found out that 26 million people have lost their job in the US over the five
consecutive weeks (Allam and Jones, 2020). The negative effects of quarantine arrangements are
largely made on shortage of labour supply. Therefore, manufacturing has been hit harder than
service industries in which the telecommuting and other technological aids to limit the fall in
productivity.
Financial crisis- Delayed in shipments, production schedules have created the financial issues
for the companies with heavy debts especially in United states. Due to decline in global equity
market and flight from the risk investor selling assets such as volatile sticks and high yield bonds
etc. Thus, rate of unemployment has tremendously enhanced and this lead to rise in financial
crisis.
Henceforth, this can be stated that the pandemic, Australians believe that the financial
health may be at greater risk than their personal health and they want a measured approach that
limits the financial damage from this issue (Barua, 2020). In addition to this, this has been found
out that majority of Australians (56 per cent) said the overall response to the pandemic was at an
appropriate level. Thus, it has been found out that the Australia will be one of the countries that
will worst affected by the economic impact of the coronavirus outbreak as factories in China
remain shuttered and millions of people are confined to their homes and banned from travelling.

Critically analyse how Australia and selected country applied macro-economy policy measures
to minimise negative impact of covid-19.
The outbreak of the covid-19 is one of primarily public health issue and this also has
major effect on the economy and financial system (Wang, Fang and Gao, 2020). Thus, foremost
report to the virus is to manage the health of population but this also plays a crucial role in
reducing the economic and financial disruptions from virus. In order to minimise the negative
impact of Covid-19 on economy of chosen Asian pacific country such as India, the measures are
outlined as-:
Indian government measures-:
Fiscal- The government authority of the Australia has announced two support packages for
people and businesses affected by the COVID-19 pandemic of 45 billion. Therefore, the
initiatives also have been made by the sovereign guarantee fund for companies to access
overdrafts in the banking system in order to pay the wages for their employees for up to 3
months with an interest rate capped at 2.85 percent for a maturity of up to 2 years (Mcfarlane,
Jetly and Vermetten, 2020). In addition to this, it can be stated that the legal authorities of the
Australian will bear the interest costs. Thus government also has taken the initiatives to adopt tax
deferral measures that will allow all companies (except banks, telecommunication, public
enterprises and companies in the chain of supply of essential goods) to postpone the payment of
profit tax until after September.
Monetary- In the context of the monetary policy the Reserve bank of India has considered the
repo rate cut of at least 50 bases. This have also suggested that spending on the covid-19
mitigation measures must be included in the definition of Corporate social responsibility.
Therefore, it enables the advanced CSR spending in terms to provide the pooled resources from
the varied corporate sectors. Thus, government of the India take steps to extend the realisation
period of export proceeds. In addition to this, the monitory policy committee of India has taken
the steps to boost the liquidity that is worth 3.2% of GDP. This will be helpful to revive the
growth and also leads to mitigate the negative impact of coronavirus on economy. In order to
deal with the nationwide lock down period, the RBI measure came to provide free food grains to
the poor to deal with the economic impact.
Exchange rate and balance of payment- The exchange rate can be defined as the ratio of
currency to another currency. Exchange rates are also determining the value of one country's

currency to another currency and the balance of payment that is statistical and comprises
transactions among residents and non-residents during a period. Henceforth, RBI mainly remain
focused on price stability and get committed to exchange rate flexibility in order to limiting its
foreign interventions that aids to preventing excessive volatility. Also, Indian government has
engaged money-service providers that plays systemic role in financial intermediation and this is
inclusive of foreign currency in order to get ensure with the uninterrupted services.
Australian government measures-:
In order to reduce the negative impact of Covid 19, the Australia government has taken
the initiatives are outlined in following context as-:
The Australia government has disclosed the range of stimulus policies over the past three
weeks in response to continually growth threat to economy due to outbreak of Covid-19. In
addition to this, it can be stated that the Reserve bank of Australia has announced the $100
billion in emergency banking measures in relation to ensure the stability of the financial system.
Thus, all guidelines are given at the time when economy of the Australia is facing server
negative effects from quarantine measures, disruptions of supply chain and falling customer
sentiment. Thus, following measures are taken by Australia are as-:
Assistance for consumers-
 The legal authorities have announced the six-month coronavirus supplements for
jobseeker payment unemployment benefit scheme. In this, those who are unable to find
the employment will get additional $550 per fortnight for the next six months. It aids to
cope up with the employment issues (Yue, Shao and Dong, 2020).
 Thus, about 6.5 million lower income Australian will get one-off $750 payment on March
31st that mainly intended to stimulate the demand of domestic market.
 In order to assist the enterprises to retain employees, the legal authorities will offer
fortnightly wage up to $1,500 per worker.
Assistance for businesses-:
 Foreign investment restrictions have been enhanced with all kind of the investment offers
that made by foreign entities in order to review with Foreign Investment Review Board
and the Treasurer.

 Small businesses with loans of up to $10 million is now allowed for the six-month
repayment deferral. Also, this has been found out that Commercial landlords with loans
of up to $10 million also will be allowed for six months' repayment relief.
 Hence, this has been investigated that enterprise with Victorian taxable wages up to $3
million will have their payroll tax for the 2019-20 financial year waived.
 The Government also has taken the initiatives to offer guarantee half the value of $40
billion in loans to SMEs in terms to reducing risks for lenders. In addition to this, this
will enable the SMEs in terms to borrow up to $250,000 for a period of three years with
the lower interest rate (Wittwer, 2020).
 In order to assist SMEs in terms to retain apprentices the legal authorities is providing the
50% wage subsidy to SMEs for learner up to September 2020. The government expects
that this is the policy that will support to 70,000 SMEs that is employing close to 117,000
apprentices.
 In order to encourage businesses to spend the legal authorities has taken the initiatives
that has increased the instant asset write-off threshold from $30,000 to $150,000.
Henceforth, this kind of the Allowable depreciation tax deductions will also be
accelerated until June 2021.
Financial support system-
 The legal authorities of the Australia have focused on the fiscal policy to support the
economy. In this way, the reserve bank of Australia has implemented the range of
monetary policies to assist the financial market. Therefore, the measures are outlined as-:
 The cash rate has been lowered to 0.25% and this also has effectively bound for the
interest rates. Henceforth, this can be stated that negative interest rate policy is highly
unlikely to occur in Australia (McKibbin and Fernando, 2020). .
 RBA has announced the larger and long term repurchase agreement facilities for the all
kind of financial institutions and this is termed out as the repo operation. It will be done
in order to offer the liquidity to financial markets.

Sector specific support- in terms to economy wide measures, the legal authorities has taken
steps towards to announce stimulus measures at the risk areas of the economy. Hence, future
policy announcement are outlined as-:
 The Air and space transport subdivision that is inclusive of the international airline
industries and domestic airline industry will get the support package of $715 million. It is
the package that is inclusive of varied fees such as aviation security charges, fuel exercise
and air traffic controller services etc.
 In order to support the operators in the tourism, education and agriculture, the $1 billion
fund for regional assistance.
CONCLUSION
Hereby, it can be concluded that economic principles are termed out as the evaluation of
the principles of economics and to understand how effective business decision aids to economy
of country. The present report is based on topic as government of Australia to provide an
economic profile for the country and to make recommendation in the context of expected
economic fallout from Covid 19. Therefore, the assignment has one social issue such as Covid-
19 that has affected the recent developments of Australian macro-economy. In this study, one
Asia specific country has been taken as India. Also, critical analysis has been covered on
Australia and Indian country that deals with macro-economy policy measures to minimise the
negative impact of Covid-19.
RECOMMENDATION
Thus, suggestive measures are outlined as-:
 The central bank must take initiatives to uses the expansionary monitory policy to
enhance the money supply, enhance the quantity of loans and to reduce the rate of
interest.
 The legal authorities must use the three main instruments in regulating the money supply
such as open market operation, discount rate and reserve requirements.
 The legal authorities must take initiatives to Stabilize the policy that seeks to keep an
economy on an even keel by increasing or decreasing interest rates as needed. Interest
rates are raised to disapprove borrowing to spend and lowered to boost dealing to spend.

The intentional act will result is an economy that is cushioned from the effects of wild
swings in demand.

REFERENCES
Books and Journals
McKibbin, W. J., & Fernando, R. (2020). The global macroeconomic impacts of COVID-19:
Seven scenarios.
Yue, X. G., Shao, X. F., Li, R. Y. M., Crabbe, M. J. C., Mi, L., Hu, S., ... & Dong, K. (2020).
Risk Prediction and Assessment: Duration, Infections, and Death Toll of the COVID-19
and Its Impact on China’s Economy. Journal of Risk and Financial Management, 13(4),
66.
Wittwer, G. (2020). The 2019-20 Australian Economic Crisis Induced by Bushfires and COVID-
19 from the Perspective of Grape and Wine Sectors (No. g-299). Victoria University,
Centre of Policy Studies/IMPACT Centre.
Allam, Z., & Jones, D. S. (2020, March). On the coronavirus (COVID-19) outbreak and the
smart city network: universal data sharing standards coupled with artificial intelligence
(AI) to benefit urban health monitoring and management. In Healthcare (Vol. 8, No. 1, p.
46). Multidisciplinary Digital Publishing Institute.
Barua, S. (2020). Understanding Coronanomics: The economic implications of the coronavirus
(COVID-19) pandemic (No. 99693). University Library of Munich, Germany.
Wang, Y., Fang, Z., & Gao, W. (2020). Covid-19's Impact on China's Economy Based on Data of
Spring Festival Travel Rush. Available at SSRN 3554638.
Mcfarlane, A., Jetly, R. & Vermetten, E. (2020). Impact of COVID-19 on mental health care for
Veterans: Improvise, adapt and overcome. Journal of Military, Veteran and Family Health,
CO19001.
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